LIC may pip Reliance Industries, TCS to become India’s most valued firm after proposed listing

India's largest financial institution could emerge as the most valued listed firm in India in case the government moves ahead with the proposed initial public offering plan.

LIC commands a net profit of a whopping Rs 48,436 crore and a total assets under management of Rs 31.10 lakh crore.

India’s largest financial institution could emerge as the most valued listed firm in India in case the government moves ahead with the proposed initial public offering plan as reported by The Indian Express today. Notably, the firm commands a net profit of a whopping Rs 48,436 crore and a total assets under management of Rs 31.10 lakh crore. “The Life Insurance Corporation has been created as a monolith. If you (LIC) were the company listed on the stock exchange, perhaps you would be the most valued company,” former finance minister Arun Jaitley had said in 2016. Currently, IT giant TCS is the most valued Indian firm with a market capitalisation of Rs 7.91 lakh crore. Reliance Industries commands a total mcap of Rs 7.70 lakh crore, making the Mukesh Ambani-led firm the second most valued Indian company in India.

According to a report by The Indian Express, a proposal to list LIC is in the early stage and has been discussed within the government. The proposal is to initially sell a small tranche of the government controlled institution through an IPO and later dilute the government’s holdings, the publication reported sources as saying. The government has already announced a proposal to make minimum public holding of 35 per cent for listed companies in the recent Budget. LIC accounts for over two-thirds of the new business premium. Almost all of its money comes from the premium paid by policyholders who must be offered competitive returns. This proposed listing of LIC comes even as the Narendra Modi-led government has announced mega disinvestment plans for the current financial year.

Even as Air India stake sale continues to elude the government, the centre plans to list 10 more central PSUs and go ahead with strategic sale in a bid to achieve the ambitious disinvestment target of Rs 1.05 lakh crore in the current fiscal, DIPAM Secretary Atanu Chakraborty said last week. As announced in the recent budget, the Union government is hoping to garner more than Rs 1 lakh crore in this financial year from the sale of its shares in PSUs.

In her maiden budget, finance minister Nirmala Sitharaman has estimated that the government’s disinvestment proceeds to be Rs 1.05 lakh crore, an increase of 31% over the last year’s figure. In the revised estimate for FY 2018-19, the Union government has pegged its disinvestment proceeds at Rs 80,000, the same as in the budget estimate. In case the government manages to move ahead with the listing of LIC, it should add further to the government’s coffers.